Is Alcoa’s Stock a Good Buy Right Now?

With shares of Alcoa (NYSE:AA) trading at around $8.74, is AA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Alcoa and Ma’aden have formed a joint venture, and the first of 720 smelting furnaces has been commissioned. With this joint venture, the aluminum industry is born in Saudi Arabia. For Alcoa, this will be lowest-cost producer project in its history. It’s a win/win for both parties. In other news, Alcoa recently signed a 10-year deal with Bonneville Power Administration for its aluminum smelter.

As you can see, Alcoa never sleeps. While the stock had a tremendous run for decades, it’s one of the few that hasn’t recovered from the 2008 financial crisis. Demand for aluminum has been poor, which has recently had a lot to do with China’s softening economy. Aluminum pricing has also dropped 17 percent YoY. On the other hand, the long-term outlook for aluminum is good.

Alcoa reported a disappointing Q3, but much of this had to do with an environmental remediation and legal settlement. We will get to the Q3 numbers soon. The good news is that Alcoa has reported higher utilization rates, lower scrap rates, and usage reductions.

Now let’s take a look at some important numbers to help determine where the stock might be headed.